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and Journal
JournalRaghvir Kaur
Accounting Cycle
The first step in the process is to identify external transactions affecting the
accounting equation.
A mechanism is needed
With this information, the next step in the processing cycle, transaction
credits .
Debits and credits represent increases or decreases to specific
Account
An account is a summary of the relevant transactions at one
ABCs A/C
Date Particulars
F
Particulars
F Amt.
Amt. Date
Classification of Accounts
Personal Accounts : Accounts which are related to individuals, firms,
Real Accounts
Real accounts are the accounts related to assets/properties.
Intangible
Nominal Accounts
for credit.
Both debit and credit may represent either increase or
JOURNAL
Journal is a historical record of business transactions or events.
The word journal comes from the French word "Jour" meaning
"day". It is a book of original or prime entry written up from
the various source documents. Journal is a primary book for
recording the day to day transactions in a chronological order
i.e. in the order in which they occur. The journal is a form of
diary for business transactions. This is also called the book of
first entry since every transaction is recorded firstly in the
journal.
Meaning of Journalising
The process of recording a transaction in the journal is called
journalising.
Step 1 Ascertain what accounts are involved in a transaction.
Step 2 Ascertain what is the nature of the accounts involved.
Step 3 Ascertain which rule of debit and credit is applicable
to be credited.
Step 5 Record the date of transaction in the 'Date column'.
close to the left hand side i.e. the line demarcating the 'Date
column' and the 'Particulars column') along with the
abbreviation 'Dr.' on the same line against the name of the
account in the 'Particulars column' and the amount to be
debited in the 'Debit Amount column' against the name of the
account.
Step 7 Write the name of the account to be credited in the
Advantages of Journal
1. The transactions are recorded in journal as and when they
Practical Problem
From the following transactions of Nikhil, find
Analysis of Transactions
30,000
Jan. 8 Sold goods on cash 6,000
Jan. 15 Bought Furniture from Yash for cash
8,000
Jan. 18 Paid Salary to manager 6,500
Jan. 20 Paid Rent to land lord in cash 1,000
Opening Entry
A journal entry by means of which the balances of
Goods Account
In accounting the meaning of goods is restricted to
and credit.
Sales Account : This account is opened for the goods sold on
the
purpose
of
advertisement.
In
this
case,
Advertisement Account is debited and Purchases Account
is credited. Goods costing Rs. 8000 were distributed as
free sample.
Interest on capital
Interest paid on capital is an expense. Therefore interest
erection of machinery
Machinery Account Dr.
To Cash/Bank Account
Sale of Asset/Property
When the asset of a business is sold, there may
occur a profit or loss on its sale. Its journal
entry is :
(i) In case there is a profit on sale of
Property/Assets
Cash/Bank Account Dr.
To Asset/Property
Account
To Profit on sale of
Asset Account
Drawings Account
It is a personal account of the proprietor. When the